Chamberlains is excited to announce their sponsorship of motorcycle racer Adrian Pelegrin for the St George MCC Summer Night Series of 21/22.

Adrian will be racing under #15 and the Chamberlains flag during four heats at the Summer Series.

We have multiple avid sports fans in the firm, and with our signature tandem bike at the front of our branding, we immediately jumped on the opportunity to become sponsors.

Adrian Pelegrin Racing – Instagram

Chamberlains is pleased to announce that we have successfully completed the first multi-party PEXA transaction in the ACT.

This is a big achievement for our dedicated conveyancing team, who have worked closely with PEXA to make this happen. In particular, we would like to recognise the efforts of Sara Kekalainen, Nichole Low and Eliza Carter who have worked tirelessly throughout this process. The move to an electronic settlement process will mean faster clearing times for settlement funds and smoother settlements for all parties. The PEXA platform has proven to be the most efficient way for property settlements to occur, as it requires no bank cheques and enables adjustments to occur right at the last minute. This is not only an exciting milestone for Chamberlains, but also for the industry in the ACT at large.

Chamberlains’ conveyancing team will continue to work closely with PEXA, the ACT Government, financial institutions, and other legal practitioners to innovate our practice. If you would like any more information about PEXA settlements, please contact our conveyancing team today on 02 6188 3600.

The ACT came a step closer to protecting buyers earlier this month with several bills introduced in the Assembly designed to prevent developers from rescinding ‘off the plan’ contracts.

Attorney General Shane Rattenbury introduced the Civil Law (Sale of Residential Property) Amendment Bill 2021 (the first bill). Peter Cain MLA also tabled a similar bill being the Civil Law (Sale of Residential Property) Amendment Bill 2021 [No 2] (the second bill).

Both bills intend to prevent developers from utilising a rescission clause under the contract unless the buyer agrees, or the Supreme Court considers it is just and equitable, for the contract to be rescinded. Interestingly, the commencement date for the first bill is the date the bill was first introduced into the Assembly. This means that if the first bill passes later this year, it will have been deemed to have come into effect, retrospectively, from 9 November 2021. The proposed changes will also apply to all current contracts, even contracts exchanged prior to 9 November 2021 and are still awaiting completion.

Sunset Clauses

A sunset clause in the contract permits the seller and (usually) the buyer to rescind the contracts if the seller has not registered the units plan by the sunset date specified in the contract. The sunset date is not the expected date for completion of construction of the development, but rather a conservative estimate with a buffer of around 12 months. Notwithstanding this, if there are significant delays, a seller could potentially exploit the sunset date by delaying construction and rescinding the contracts.

Delay Event Clauses

In addition to a sunset clause, most contracts are subject to an approvals clause or an impediment to works clause. These clauses permit the developer to rescind if they have not been able to obtain approvals to commence construction (for example, development approval or finance approval) or if there is an impediment to construction (shortage of materials, change in building regulations, or other unforeseen issues (for example the COVID-19 pandemic)).

The Proposed Changes

Both bills propose several significant amendments to the Civil Law (Sale of Residential Property) Act 2003. It is likely the bill introduced by the Attorney General will be debated and will form the basis for any changes before the bill passes, and as such, we will only focus on the proposed changes in the first bill.

Under the proposed changes, if a seller seeks to rescind an off the plan contract by giving formal notice to the buyer, the notice must give the buyer not less than 28 days to respond and include:

1. The reason for the seller’s proposed rescission;
2. A statement the buyer is not required to agree to the rescission;
3. A statement explaining the seller may apply to the Supreme Court for an order permitting the seller to rescind and that the seller must pay the costs of the buyer concerning a proceeding for the order unless the seller satisfies the Supreme Court that the buyer unreasonably withheld consent to the rescission of the off the plan contract under the rescission provision.

The proposed changes also prevent the Supreme Court from granting an order permitting the seller to rescind unless it is just and equitable to do so. In considering whether rescission is just and equitable, the Supreme Court must look at:

1. the terms of the off the plan contract and whether a term is intended to avoid the operation of the new proposed changes;
2. whether the seller has acted unreasonably or in bad faith;
3. whether factors beyond the seller’s reasonable control have affected the seller’s ability to complete the contract or the viability of the seller’s business;
4. whether the seller has taken reasonable actions to avoid the rescission;
5. whether the unit or land the subject of the contract has increased in value;
6. the effect of the rescission on the buyer;
7. whether the buyer has been performing their obligations under the contract;
8. the effect of completing the contract on the seller;
9. any other matter prescribed by regulation.

Examples are given for what the Supreme Court might consider when assessing whether there are factors outside the seller’s reasonable control that have affected the seller’s ability to complete the contract (item 3 above). These include:

1. disruption to supply of building materials;
2. significant increase in cost of goods and services;
3. inability to obtain or retain finance for the development;
4. changes in the law affecting the development, building standards etc;
5. imposition of conditions on development approval that require significant changes to the development.

Although the proposed changes aim to prevent sellers from rescinding contracts, the bills do give scope for a seller to rescind in certain circumstances, most notably if there is a disruption to supply of and/or increase in the cost of building materials. Interestingly, many developers have rescinded contracts in the ACT, citing increased costs and shortage of materials raising significant questions over whether the bills (in their current form) will protect buyers as intended. This, coupled with the fact the buyer must not act unreasonably in agreeing to a rescission, might see developers still pushing for rescissions under threat of a costs order being made against a buyer for failing to agree to the seller’s request.

However, instances of sellers rescinding contracts by exploiting clauses where they are acting bad faith or attempting to gain a windfall from an increase in the value of the units are likely to be caught by these changes.

In any event, if the bill (in one form or another) does pass in the Assembly, it will undoubtedly add a welcome extra layer of protection to buyers.

Chamberlains is ready help you. Contact our conveyancing team for any legal questions!

The recent decision in Lonergan v Trustees of The Sisters of Saint Joseph & Anor [2021] concerned allegations of historic sexual abuse of a child by a priest. Significantly, the Supreme Court of Victoria discussed whether an earlier settlement between the parties should act to offset the current assessment of compensation.

The Plaintiff in the case was abused by the Parish Priest, Gregory Coffey, while attending St Joseph’s Primary School in Ouyen, Victoria from 1973 to 1974, for which liability was admitted. It was held that the abuse was caused by a breach of duty by the Catholic Diocese of Ballarat and the Sisters of Saint Joseph, who owed a duty of care towards the students of the school.

As a result, Keogh J assessed compensatory damages at $650,000. This sum was made up of $250,000 for pain and suffering and loss of enjoyment of life, $10,000 for future treatment expenses, and $390,000 for economic loss. Other issues were raised by the Plaintiff but ultimately the Court did not make an award for aggravated or exemplary damages.

However, the Plaintiff had made a prior claim in 2000 against the Defendants for injury, loss and damage cause by the abuse, which settled by confidential agreement for $45,000 inclusive of costs. Consequently, the Court had to consider whether the sum previously received by the Plaintiff in his prior settlement should be taken into account in the current settlement.

The Court concluded that it was neither just nor reasonable to take account of the amount paid under the initial settlement by setting it off against the assessment of damages in these proceedings. This was because the Diocese obtained a real benefit of the Plaintiff maintaining the confidentiality of the first settlement. Further, the sum of the first settlement was modest, and the Plaintiff was disadvantaged by the lapse of time due to the effects of inflation.

The case therefore highlights that previous settlements should not be taken into account in future assessments of damages in historic abuse matters where this would be unjust or unreasonable.

If you have any legal questions or concerns, contact our team of experts in injury compensation.

In the matter of 1A Eden Pty Limited [2021] NSWSC 82 the Court considered whether a disagreement between directors was solemn enough to wind up the company.

P, a director, applied to wind up a company that was the trustee of a unit trust.

P’s fellow directors were S and D. P said there was a deadlock and relations between them had broken down.

P and S were builders. D was a property developer. The 3 agreed to found the Co to develop a site together with P and S to share 50% of the profits and D to take the remaining half as unit holders.

There was no written agreement.

In 2013 the company was established and the unit trust was settled.

Even though it was intended an entity of P and S would do the building work, a new cheaper contractor was found.

In 2016 the building was completed.

In 2016 P, S and D agreed to take unsold apartments as their profit share with S also taking $500,000.00 in cash.

In 2017 the company declared profit of around $8m.

The parties agreed on notional values of units for the purpose of profit distribution.

The Owners Corporation of the building the company constructed commenced building defect proceedings against the company and the contractor.

In 2018 P and S received their apartments, though D did not.

In 2019 the company, as part of the defect proceedings, was obliged to pay $15,000.00 for expert fees. D did not agree to contribute and the  was then out of money. P paid on the company’s behalf.

P suggested a deadlock had arisen about paying the expert.

P lodged caveats over the company’s properties which were to be transferred to D.

P took the approach that while P and S should retain their profits (via apartment ownership), the apartments to be transferred to D ought to be retained for any liability the company might have pursuant to the defect proceedings.

D sued seeking (among other things) to remove the caveats and restore the 50:25:25 distribution.

P suggested the profit calculations had a $156,000.00 shortfall for which P blamed D.

D denied any deadlock and proposed an audit.

The Court found the suggestion of a breakdown of the relationship artificial. From 2013 to 2019 P was happy to leave admin and accounting in D’s hands, the venture made $8m in profit, and all parties had agreed on its distribution.

The Court considered this windup application, which might thwart the caveat proceedings and defect proceedings, was “infused with self interest”.

While a liquidator could investigate defending claims and seeking an account, the cost may be disproportionate noting P was chasing an estimated $156,000.00. Nor did P undertake to fund the liquidator.

Winding up would affect the Owners Corporation adversely. Winding up is a last resort and alternative, less drastic remedies are available.

The application was dismissed. Costs followed the event.

This matter is a lesson about the importance of maintaining healthy relationships with fellow board members, and for getting legal advice on what happens when things go badly.

 

If you have any questions or concerns please contact Chamberlains and talk to our dispute resolution team today.

Are you involved in an insurance-related dispute? Below is a summary of insurance terminology that you may encounter. 

Aggregate– the amount of money an insurance company will pay under its policy for all claims, which will arise during the period of insurance.

Assessor – an assessor reviews the lodged claim forms and assists the insurance company to approve/deny the insurance claim.

Certificate of Insurance – a document that provides a summary of your insurance terms under the insurance policy.

Claim – is the request you lodge seeking for your insurance policy to respond if you have suffered loss and/or damage as a result of an event/accident. 

Claimant – a third party making a claim under the insurance policy.

Cooling-off period – a period of time that allows you to withdraw from your insurance policy if you change your mind and obtain a refund.

Coverage – the scope of protection provided by an insurance policy.

Disclosure (duty of disclosure) – information that the insured will need to provide their insurer, which includes anything that the insured knows or could reasonably be expected to know that may affect the insurer’s decision to provide the policy of insurance and/or vary the terms of the insurance policy.

Excess – also known as a deduction. It is the amount that you will need to pay your insurance company for each claim you make under your insurance policy.

Endorsement – an additional provision that is included in the insurance policy that either adds, deletes, or alters the general terms of your insurance policy.

Code of Practice – also known as General Insurance Code of Practice. It is a voluntary code that sets minimum standards for insurers seeking to raise the service standards across the general insurance industry.

Good Faith (duty of utmost good faith) – a common law duty that each to the insurance contract must act with fairness and honesty in their dealing with each other.

Indemnity – is the security or coverage that will protect you against loss, damage or injury.

Negligent – is when you have not used reasonable care and obligations arise to another person. This usually occurs when something has gone wrong, for example, a motor vehicle accident that caused injury to another person.

Product Disclosure Statement (PDS) – a set of terms and conditions concerning your insurance policy that the insurance company must provide.

Premium – an amount of money that the insurer will charge you for the insurance period.

Subrogation is a common law right allowing an insurer to take over the insured’s rights upon a claim lodged by the insured.

 

If you have any questions or concerns please contact Chamberlains and talk to one of our insurance law experts today.

From 5 April 2021, the ‘unfair contracts’ provisions of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) have been applied to the Insurance Contracts Act 1984 (Cth) (ICA). This means that insurance contracts, like car insurance, life insurance, and house and contents insurance will be subject to unfair contract term provisions.  

What are ‘unfair contract’ terms?

Section 12BF of the ASIC Act states that a ‘consumer contract’ or ‘small business contract’ is void if: 

1. the term is unfair; 
2. a contract is a standard form contract; and 
3. the contract is: 
   1. a financial product; or 
   2. a contract for the supply, or possible supply, of services that are financial services. 

What is unfair? 

Section 12BG of the ASIC Act states that a term is unfair if it: 

1. causes a significant imbalance in the party’s rights and obligations under the contract; 
2. it is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term; and 
3. would cause determent to a party if it were to be applied or relied upon. 

What is a consumer contract? 

A consumer contract is a contract where at least one of the parties to the agreement is an individual whose acquisition of what is supplied under the contract is wholly or predominantly an acquisition for personal, domestic or household use or consumption.

What is a small business? 

A small business contract is where: 

1. at the time the contract is entered into, at least one party to the contact is a business that employs fewer than 20 persons; and 
2. either of the following applies: 
   1. the upfront price payable under the contract does not exceed $300,000; or 
   2. the contract has a duration of more than 12 months, and the upfront price payable under the contract does not exceed $1,000,000. 

Please note that casual employees are not counted for the purpose of determining how many people are employed by a small business unless they are employed on a regular and systematic basis. 

Excluded Contracts 

The unfair contract terms do not apply to all insurance policies, like health insurance, compulsory third-party schemes, and workers compensation. 

Implications 

If a term in your insurance contract is deemed unfair, a court can declare it void or strike out the provision that it deems to be unfair, with the remaining terms of the contract continuing to operate between the parties. 

If you think that a term in your insurance contract is unfair, you can: 

1. make a complaint to your insurance company under its dispute resolution process; 
2. lodge a complaint with the Australian Financial Complaints Authority; or 
3. take the matter to Court and ask for a declaration that the term in the insurance contract is unfair. 

If you have any questions or concerns please contact Chamberlains and talk to one of our insurance law experts today.

In Sgro v Australian Associated Motor Insurers Ltd [2015] NSWCA 262, the New South Wales Court of Appeal determined that for an insurer to deny a claim on the basis of fraud, it must prove that the insured made a false statement for the purpose of persuading the insurer to pay the claim.

Background

Mr Sgro was an owner of a 360 Modena Ferrari, which he had insured with Australian Associated Motor Insurers (“AAMI“). Mr Sgro alleged that his vehicle was stolen and he made a claim with AAMI for the value of the vehicle, being $190,350.00.

AAMI denied the claim on the basis that MR Sgro made six false statements in relation to his insurance claim, namely surrounding its whereabouts on the date of the alleged theft. On this basis, AAMI alleged Mr Sgro had committed fraud in accordance with section 56 of the Insurance Contracts Act 1984 (Cth) (“ICA“).

Mr Sgro commenced proceedings against AAMI in the District Court of NSW. Olsson J held that, although she had been satisfied that Mr Sgro’s vehicle was stolen, there were inconsistencies in his evidence that entitled AAMI to deny his claim pursuant to section 56 of the ICA. However, Olsson J did not make actually make any finding of fraud against Mr Sgro.

Decision on appeal

Mr Sgro appealed Olsson J’s decision on several grounds, including that her Honour had allegedly erred in a finding AAMI was entitled to refuse Mr Sgro’s claim pursuant to Section 56 of the ICA.

The Court of Appeal determined that, on the balance of probabilities, Mr Sgro could not establish that his vehicle was in fact stolen.

However, this did not necessarily mean that AAMI had established fraud for the purposes of section 56 of the ICA.

The Court of Appeal said that given the gravity and seriousness of a finding of ‘fraud’ it is important that such allegations are plead correctly and without fault. Although AAMI’s pleadings alleged that Mr Sgro had made false statements, AAMI did not plead that the false statements were made ‘with the intent to induce AAMI to pay the claim’.

The Court held that without such pleading it was unable to find that AAMI had established its case of fraud.

Implications

Insurers should be careful when denying claims based on fraud under section 56 of the ICA. It must be shown, and expressly pleaded, that the fraud was perpetrated with an intention to induce payment of the claim.

 

If you have any questions or concerns please contact Chamberlains and talk to one of our insurance law experts today.

Litigants may be interested to know that there are circumstances in which a lawyer may be liable for legal costs incurred in connection with a matter.

Section 99 of the Civil Procedure Act 2005 (NSW) (“Act”) provides that a legal practitioner may be required to pay costs:

1)         … if it appears to the Court that costs have been incurred:

(a)        by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or

(b)        improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible

 

However, in White Industries (Queensland) Pty Limited v Flower & Hart [1998] FCA 806 the Federal Court of Australia articulated that a legal practitioner who pursues for their client a claim or defence which is likely to fail does not (without more) fall foul of section 99 of the Act.

Liability under section 99 of the Act requires an act or omission where the costs incurred have been a result of serious neglect, serious incompetence, or serious misconduct by the legal practitioner.

Examples include, but are not limited to, the following instances:

• A legal practitioner’s failure to determine whether there are reasonable prospects of success.
• A legal practitioner who pleads a defence for the sole purpose of delaying proceedings.
• A legal practitioner who acts on a claim which appears to be a clear abuse of process.
• A party’s non-compliance with Court orders being solely attributable to the conduct of that party’s solicitor.

Implications

Although the threshold is relatively high, if you feel that you have been severely disadvantaged by a solicitor’s conduct, you may have the option to pursue costs against that legal practitioner personally.

 

If you have any questions or concerns please contact Chamberlains and talk to one of our insurance law experts today.

In Wigge v Allianz Australia Insurance Ltd [2020] NSWSC 150, the NSW Supreme Court granted leave to a plaintiff to pursue proceedings against a public liability insurer, Allianz. The key issue was whether Allianz could disclaim liability for its insured pursuant to section 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) (“Act“).

Background

On 13 June 2017, Dr Susanne Wigge commenced proceedings in the District Court of NSW relating to an injury she had sustained during a yoga class in or around 2014. The proceedings were commenced against KMYOGA (Holdings) Pty Ltd (“First Defendant”) and Kathryn McCusker (“Second Defendant”).

In March 2018, the First Defendant was deregistered and Dr Wigge was unable to pursue her claim against it. Consequently, Dr Wigge filed an Amended Statement of Claim substituting the First Defendant with Allianz Australia Insurance Limited (“Allianz”), being the insurer of the First Defendant.

Allianz objected to being added as a defendant to the proceedings on the basis that, amongst other things, it wasn’t required to indemnify the First Defendant against Dr Wigge’s claim.

Decision

The main question before the Court was whether the contract for insurance between the First Defendant and Allianz would cover the First Defendant for the loss suffered by Dr Wigge.

The Court said that leave to proceed against an insurer pursuant to section 5(4) of the Act would not be granted if the insurer can establish that it is entitled to disclaim liability under the contract for insurance. The Court commented that the section was designed to “insulate insurers from exposure to untenable claims. The discretion to give leave to bring such a claim is to be exercised with this in mind.”

In its attempt to disclaim liability, Allianz relied on an exclusion clause in its policy which provided that cover would not extend to damages arising from at ‘sport exercise or activity’.

Dr Wigge argued that although yoga involved physical activity, it was not a sport, exercise or activity but was ‘meditative’ and, therefore, not subject to the exclusion clause.

The Court determined that, based on Dr Wigge’s argument, Allianz was not able establish that it could disclaim liability under the First Defendant’s insurance contract.

The Court granted Dr Wigge leave to proceed against Allianz.

Implications

This decision illustrates that the Court may allow a plaintiff to proceed against a defendant’s insurer in a wide range of circumstances, and that it may not be straightforward for insurers to disclaim liability .

 

If you have any questions or concerns please contact Chamberlains and talk to one of our insurance law experts today.